Summary: With a variety of merchant account providers to choose from, be sure to select one that meets your financial criteria.
If you are looking to accept debit and credit cards for your business, one solid option that you utilize is a merchant account. This account is typically provided by a bank and functions as a contract between the merchant (you) and the issuing bank. When you obtain an account, you are required to follow all operating regulations that are established by the bank and credit card companies. This also includes the fees associated with the account as well.
An early termination fee is enforced when the merchant decides to end the contract prior to the contract end. Now, not all merchant account providers will require you to sign a contract, but a majority of them that do will include some sort of cancellation fee.
The minimum dollar amount that you must process for every transaction is dependent on the type of merchant account that you are dealing with. If you do not meet or exceed the monthly minimum stated by the merchant account, the provider will charge you the difference in order to negate the amount owed.
This is a type of tool to prevent fraud by automatically verifying a cardholder’s address with the credit card address that you have on file. Now, some merchant account providers will charge a small fee for every transaction that you use address verification on. This isn’t mandatory to do as a business owner, but use it if you feel it’s necessary to do so.
Marchant Accounts with no Monthly Fees
Pierre Zarokian, CEO of Reputation Stars says: “In the past few years merchant account providers such as Square and Stripe have been offering merchant accounts that charge a higher transaction fees at 3% to 3.5% but have no monthly fees. However, if you do over $10K a month in transaction, then you may be better off with a tradational merchant account that charges aound 2.3% transaction fee but has a monthly fee of $50.”
“Watch out for those chargeback, not only too many chargebacks may get your account cancelled, but there may be penalty fees for chargebacks,” add Pierre Zarokian.
The Bottom Line
There are a variety of different fees that you may face if you decide to utilize a merchant account provider. They do vary based on the provider so be sure to read the fine print for every candidate prior to signing up. This way, you won’t be hit with hidden charges.